βοΈImbalanced Open Interests: Funding Rate
An imbalance in open interest is never desired. The dominant party pays the other through a funding fee every 1 hours. The funding rate fluctuates based on the utilization rate of the LP pool and the skewness of open interests.
Such a funding fee incentivizes market makers to provide liquidity by equalizing open interests. This mechanism ensures that liquidity in the LP pool is only reserved temporarily, guaranteeing that funds are always accessible for LPs to withdraw.
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